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What are the basics of Chapter 13 bankruptcy?

Most people in Chattanooga know that there are different types of bankruptcy filings. However, they may not know the difference between these plans. For instance, what are the basics of Chapter 13 as opposed to Chapter 7 bankruptcy?

Chapter 7 bankruptcy is probably the most well-known type of bankruptcy filing. In this type of "liquidation" bankruptcy, a filer will designate all non-exempt assets to be sold by the bankruptcy trustee, and then many remaining debts will likely be discharged.

But, what are the basics of Chapter 13 bankruptcy? Well, the main difference is that Chapter 13 bankruptcy is for those who are still earning a decent income. For these filers, the idea is to make a repayment plan to address the debts that are owed over the period of a few years - typically three to five years. Perhaps the biggest benefit for a Chapter 13 bankruptcy filing is that while a filer is going through the process, all creditors are prohibited from initiating any type of collection action.

Many Tennessee residents are still facing financial challenges, even as all indications are that the national economy is picking up steam. For those who need to reduce debt and get a fresh financial start, Chapter 13 bankruptcy may be a reasonable option to take a new look at debts that are owed in order to come up with a plan to make manageable payments over the course of a few years. Our readers who are in this type of financial situation may need to get more information about the benefits of filing for Chapter 13.

Source: uscourts.gov, "Chapter 13 - Bankruptcy Basics," Accessed March 20, 2017

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-954-7180
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